Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, March 15, 1992                   TAG: 9203130330
SECTION: BUSINESS                    PAGE: D-2   EDITION: METRO 
SOURCE: DANIEL HOWES BUSINESS WRITER
DATELINE: WASHINGTON                                LENGTH: Medium

PHONE COMPANIES COULD BE TROUBLE FOR NEWSPAPERS

Just ask your local newspaper publisher - who might someday want to offer the news, its classified ads, or both, to electronic subscribers. Another player can only cut into revenues.

And that would be just the beginning.

Allowing telephone companies into what's called the "information services" business - everything from stock quotes to news articles to sports scores - is a worrisome prospect for newspaper companies. Some already are fashioning plans to use those same phone lines to market information products now appearing only in newspaper pages.

The fear is simple: Phone companies own, maintain and control the telecommunications network. If they get the go-ahead to produce, package and sell information, publishers fret that their products will be charged a premium to use that network. Or worse, they could be barred altogether.

"To be forced to rely on one's competitor for delivery of an electronic product is ludicrous," said Cathleen Black, chief executive officer of the American Newspaper Publishers Association. She made those comments last fall to a House judiciary subcommittee. "Those who own the electronic highways should not be able to run others off the road," she said.

That's why the ANPA, among others, is backing legislation that would put careful conditions on telephone companies aiming to get into the information game.

The "Telecommunications Act of 1991" would:

Require all local telephone companies to provide an open, interconnected network to all telecommunications and information services providers, such as newspapers.

Urge the Federal Communications Commission to accelerate the drive for competition in local telephone service. Conceivably, the local cable company also could provide telephone service, which would, in turn, be interconnected into regional, national and international networks.

Allow the Baby Bells into "non-content" information services so long as they establish separate subsidiaries and observe strict accounting practices. The separations are designed to insulate telephone customers from sharing the costs of the new ventures.

Allow the Bell companies to provide information services they produce only in areas outside their regional service areas. With seven Bell operating companies, that would give each access to nearly 86 percent of the nation's homes and businesses. They could provide information services in their own areas if they could prove that only they could provide such a service.

The Bells, for their part, are prepared "to go to the mat" over information services, said Tom Tauke, vice president for government affairs at New York-based Nynex Corp. The business is a small, but vital, portion of the nation's data flow - the source of most news and proprietary information.

"When we say. `We're more than just talk,' it's not just an advertising slogan," said Aubrey Sarvis, vice president for federal relations at Bell Atlantic Corp., parent of C&P Telephone Co. "We do need to get into information services; we do need to get into cable" television.

The stakes are high.

First came a federal judge's ruling last fall opening the way for the Bells to create and own the information and then distribute it over their wires. The opening salvoes, some of them vicious, came soon thereafter.

The Bells targeted supporters of the so-called "Publishers' bill," saying they wanted to maintain their information monopoly and squelch competition. Big newspaper ads reminded readers of past excesses by the phone companies and raised the frightful specter of Big Brother with his big computer.

The phone companies, for their part, say much of the hoopla is just that - hoopla. They're engineers, not news producers, they say; and they don't plan to hire scores of reporters to compete with everyone from the New York Times to the local daily.

But publishers can't afford to take that chance. With a limited pool of advertising dollars, the last thing they want to see is advertisers reallocating part of that money to information service competitors.